Problem:

Consider an asset that costs $396,000 and is depreciated straight-line to zero over its 9-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $49,500.

Required :

If the relevant tax rate is 30 percent, what is the aftertax cash flow from the sale of this asset? (Do not round your intermediate calculations.)

• $34,650.00
• $105,682.50
• $95,617.50
• $658,362.00
• $100,650.00

Note: Provide support for your rationale.